Laforme v. The Queen, 91 DTC 5372, [1991] 2 CTC 28 (FCTD)

Giles, A.S.P.: —The motion before me is by the respondent, the Crown, to quash the statement of claim which was issued to appeal the order of Goetz, J. of the Tax Court of Canada. Goetz, J. had quashed a purported appeal by the appellant on the basis that no notice of objection had been filed with the Minister within the time required by section 165 of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act").

The appellant admits that he did not file a notice of objection but filed a notice of appeal with the Tax Court of Canada.

The appellants complaint is that no effect has been given to section 87 of the Indian Act, R.S.C. 1985, c. 1-5 which, as interpreted by the Supreme Court of Canada in Nowegijick v. The Queen, [1983] C.T.C. 20; 83 D.T.C. 5041, provides that the income of an Indian is in certain circumstances not subject to income tax. The Tax Court of Canada is a statutory court and has jurisdiction provided by statute. No statute providing jurisdiction to the Tax Court of Canada other than the Income Tax Act and the Tax Court of Canada Act was drawn to my attention. The jurisdiction of the Tax Court of Canada derived from section 12 of the Tax Court of Canada Act and the Income Tax Act (Division J) is dependant on a notice of objection being filed. In his statement of claim in this Court, the appellant alleges he is not bound by the procedural provisions of the Income Tax Act which are excluded by the Indian Act.

Dealing first with that point, I note there is nothing in the Indian Act which expressly makes inapplicable any provision of the Income Tax Act. This is to be expected, because as the Supreme Court of Canada pointed out in Nowegijick v. The Queen, supra, income tax was not introduced until long after the predecessor of section 87 was written. It appears from its wording that the Indian Act takes priority over the Income Tax Act, but there is nothing to indicate that the priority would be only over the procedural portions. If the appellant, pleading as an Indian, seeks and is entitled to take advantage of the rights to appeal to the Tax Court of Canada contained in the Income Tax Act, he, like any other subject, is entitled to do so only in accordance with the provisions laid down in the Income Tax Act.

Relief sought by the appellant is set out in paragraph 10 of his statement of claim as follows:

10. The Appellant therefore claims that Goetz J. of the Tax Court of Canada erred in law ana that he is entitled as follows to:

(a) A declaration that the income received from the Oromocto Indian Band, as described above, is tax exempt pursuant to the provisions of the Indian Act;

(b) A declaration that the Notice of Reassessment mailed on August 20, 1987 herein is void;

(c) A declaration that the Appellant is not bound by any procedural or other limitations prescribed by the Income Tax Act which are, in law and fact, excluded by operation of the Indian Act where the latter statute exempts income from taxation;

(d) In the alternative to the relief requested in the preceding paragraph, an order that the Notice of Appeal herein is to be treated as a notice of objection and directing the Tax Court of Canada to proceed with the hearing of an appeal forthwith, or, in the further alternative, an injunction directing the Minister of National Revenue, his officers, servants, agents and employees, to cease and desist any and all attempts to collect any income tax, interest or penalties pursuant to the notice of Re-assessment herein or otherwise in respect of the income therein sought to be assessed;

(e) His costs of all proceedings with the Ministry of National Revenue, the Department of Justice and before the Courts as between solicitor and client;

and

(f) Such further and other relief as this Honourable Court deems just in all the circumstances.

The first point to note is the claim that Goetz, J. erred in law. It is quite apparent from M.N.R. v. Flemming Estate, [1984] C.T.C. 352; 84 D.T.C. 6345, and other decided cases that Goetz, J. did not err in law. In the absence of a notice of objection there is no jurisdiction in the Tax Court of Canada to hear an appeal and granted, as in this case, an admitted failure to file a notice of objection, there is no appeal from the Tax Court of Canada to this Court.

This Court has a wider jurisdiction than the Tax Court of Canada as actions against the Crown may be brought in this case for matters other than the correction of incorrect income tax assessments. When this matter was argued before me, it seemed from the cases as summarized in the reasons of Mr. Justice Rouleau in Louis J. Devor v. M.N.R., [1988] 2 C.T.C. 155; 88 D.T.C. 6370, that there was a residual jurisdiction in this Court to supervise administrative acts for which no right of appeal remained by the Income Tax Act. Since that time the reasons for the decision of the Federal Court of Appeal in Optical Recording Laboratories Inc. v. Canada, [1990] 2 C.T.C. 524; 90 D.T.C. 6647 have become available, it is now plain that any attempt to correct an assessment by use of sections 18 or 28 of the Federal Court Act is prohibited by section 29 of that Act.

This Court might in a properly phrased claim have jurisdiction to provide relief for an infringement of section 87 of the Indian Act under section 16 of the Federal Court Act and might of course also in such an action, as it would not be an appeal under the Income Tax Act, have jurisdiction to grant a declaration such as that requested in paragraph 10(a). However, a declaration is relief available under section 18 of the Federal Court Act and therefore denied in this case by section 29 because there was an appeal procedure under the Income Tax Act (which the appellant elected not to follow).

In paragraph 10(b) the declaratory relief is as to a specific notice of Assessment and it is hard to conceive of any circumstances where section 29 would not apply to preclude the relief sought.

Paragraph 10(c) seeks a declaration that the applicant was not bound by the procedural or other limitations prescribed by the Income Tax Act. As stated earlier, the applicant is entitled to take advantage of the provisions of the Income Tax Act with regard to appeals if he carries out the necessary prerequisites. It is conceivable that in proper circumstances he might be entitled to a declaration that no part of the income at issue was subject to any part of the Income Tax Act. However, those circumstances would not include the circumstances of an appeal from the Tax Court of Canada.

Paragraph 10(d) seeks: (i) by way of alternative relief an order that the notice of appeal herein be treated as a notice of objection and directing the Tax Court of Canada to proceed with the hearing. If, as I very much doubt, this Court had jurisdiction to order the notice of appeal be considered a notice of objection, the Tax Court would not have jurisdiction until the Minister had had the prescribed opportunity to consider the objection, so the second part of the relief sought is not available; (ii) in the further alternative an injunction directing the Minister, his servants etc. to cease . . . all collection efforts . . . in respect of the income sought to be assessed. This relief is tied by the wording of the claim itself to an assessment and therefore was the subject of a possible appeal under the Income Tax Act. Section 29 of the Federal Court Act applies to deny the relief sought which might otherwise be available under section 17 of the Federal Court Act. In my view, there is not a glimmering of a chance of success for an appeal from the decision of the Tax Court of Canada. Notwithstanding that an appeal from the Tax Court of Canada has been said to be a trial de novo, it is still an appeal and only matters which could have been before the Court appealed from, can be considered. I do not therefore think it is open to me when striking this claim to do so without prejudice to allow an amended claim for relief which might be available under section 16 of the Federal Court Act.

Order

The statement of claim of Harry Smith Laforme is struck out and his action dismissed.

Crown's motion granted.